New Report : Assessing the potential for crowdfunding and other forms of alternative finance to support research and innovation

ECN is glad to annonce that the results of the study–’Assessing the potential for crowdfunding and other forms of alternative finance to support research and innovation are finally out. The research , assigned by the European Commission’s Directorate-General for Research &amp; Innovation (DG RTD) in December 2015, was conducted by ECN together with Open Evidence,EY and Politecnico di Milano.

The study was structured according to three main objectives. Here we summarize the main findings for each one respectively :1) To quantify and qualify the potential of alternative finance in Europe with regard to research and innovation;

« The estimated aggregated value of AF investment in R&I in the EU was approximately EUR 755.1 million in 2015, which constitutes between 1/6 and 1/8 of the total value of the European alternative finance market. AF plays a significant role in funding European R&I, especially when compared to the Horizon 2020 budget of approximately EUR 10 billion annually. However, whilst considering the strong difference in size and growth rate of AF between Europe and the rest of the world, it is clear that European innovators are not benefiting from AF to the same extent as their competitors from other regions of the world. »2) To identify key challenges influencing the development of AF, and AF for research and innovation in particular;

« There is a clear distinction between funding models for research vs. innovation. Donation and rewards-based funding models are mostly suitable for basic research, whilst equity and in part lending and reward, are useful for later stages of the innovation cycle, closer to market. Finally, projects funded by equity and lending platforms are bigger than those funded by rewards and donation, thus innovation AF campaigns are bigger than those focused on research. R&I projects (regardless of the platform) raise, on average, more funds than other projects but have lower success rates… »3) To recommend actions to overcome those challenges and to exploit the opportunities of AF for R&I.
« Looking at the different types of R&I, it appears that AF is more suitable for:
1) Later stages of the innovation cycle, when the results are easier to anticipate and evaluate by the “crowd” (according to the study results, there are on average 3 times more innovation-oriented projects than research-oriented projects),
2) Innovation related to the improvement of life-conditions (energy, environment, food, health),
3) Less capital-intensive initiatives (e.g. not for nanotechnology and research in space). »

This study is unique in terms of scope, as it concentrates on R&I only. Therefore, the analysis and policy recommendations focus on the specific aspects relevant for R&I funding by default. This objective falls within the mission of ECN too, which has gladly supported the creation of this study.